Euro: USD/EUR (EUR=X) sharply lower

Euro: USD/EUR (EUR=X) sharply lower

Euro: USD/EUR (EUR=X) sharply lower

EUR/USD turned sharply lower yesterday which could be the first step in a trend reversal after a nearly 5% gain from last week’s low.

The pair was weighed by a strong dollar as the greenback is seen broadly recovering against the major currencies after a notable fall last week.

Home sales in the United States were reported to increase by 2.4% yesterday, coming in ahead of the analyst estimate for a decline of 1.8%.

However, since the data covers sales in February, it’s relevance is significantly reduced considered that the virus outbreak escalated towards the end of the month. Investors will tend to focus on data that reflects how the economy did in March and continue trying to assess how the economy is performing in light of the Coronavirus.

In this context, today’s euro Consumer Price Index figures will tend to have an impact on the exchange rate as it reflects data in March. Coming into the month-end, data releases moving forward may have an unusually large impact on the exchange rate and can deviate significantly from the analyst estimate as the Coronavirus is expected to have influenced the figures. This was seen last week with the US jobless claims report.

The developments in EUR/USD in the early week appear significant and could be signaling a bearish reversal.

The pair posted a bearish engulfing candle yesterday which supports the case for a reversal. In addition to that, EUR/USD has also failed to hold above the 200-day moving average which is otherwise an important and respected indicator.

Further, the pair is probing support at the psychological 1.1000 handle in the early day with what appears to be a general lack of strong buying pressure.

If EUR/USD falls through the 1.1000 support, the next area of downside interest falls at 1.0923. But more importantly, it could be signaling that the prior bullish trend has ended.

In the event of a recovery, the 200-day moving average offers some upside resistance with further resistance seen at 1.1074.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.12.

The projected lower bound is: 1.08.

The projected closing price is: 1.10.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 68.6814. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 16 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 38. This is not a topping or bottoming area. The last signal was a buy 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed down -0.001 at 1.102. Volume was 65% below average (consolidating) and Bollinger Bands were 146% wider than normal.

Open     High      Low     Close     Volume___
1.103 1.104 1.100 1.102 27,672
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.09 1.10 1.11
Volatility: 18 13 8
Volume: 128,893 98,948 77,856

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX EUR= is currently 0.5% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on EUR= and have had this outlook for the last 1 periods.

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